Killing the Price Surprise

By Evan Schuman |
Posted 08-27-2005

Yahoo Updates Its Small Biz E-Commerce Package

Yahoo Inc. has gone into beta on an enhanced version of its e-commerce hosting service, which is positioned for the small business that can't justify its own Web team nor the time to outsource it to programmers and Web designers.

Although Yahoo's dominant service is its search engine and the associated advertising revenue, it has built a substantial e-commerce Web hosting business, touting more than 35,000 such sites hosted.

That number excludes merchants in mass marketplaces or those that sell through other sitessuch as Amazon.comand is limited to retailers with their own domain touting "uniquely branded services," said Jimmy Duvall, director of e-commerce products for Yahoo.

Duvall says that number makes Yahoo the largest provider of e-commerce and Web hosting services, but analysts question whether that's a provable claim. Either way, it is one of the largest e-commerce hosting firms.

"It's a hard number to either verify or disprove. If you talk to the people at GoDaddy.com or other sites with e-commerce services, it's hard to verify," said Patti Freeman Evans, retail analyst with Jupiter Research. "Yahoo does have a lot of companies."

The changes all involve the checkout pages and primarily are design and layout modifications, with the underlying programming minimally tweaked.

Among the changes are checkout pages that can be one continuous scrolling page (rather than the typical multipage checkout) and the immediate display of final pricing (including tax and shipment data) before the customer needs to provide address or payment information beyond Zip code.

Another change is the addition of more design options so that the checkout pages can more closely resemble the rest of the merchant's site.

Yahoo's focus on the checkout process is understandable as that is both the most complicated and programming-intensive part of any e-commerce site and also the part of the site that has the last chance to either make or lose the sale. A slow, cumbersome or frustrating checkout process is where many e-commerce customers abandon the process.

"Checkout is a key area of any e-commerce site," said Jupiter's Evans. "Some 84 percent of consumers abandon their shopping cart. You don't want the checkout process to be something they trip on."

Yahoo's Duvall said the design control changes are intended to address the problem of consumer confusion when the checkout screen looks quite different from the rest of the merchant's site. Given the large number of sites today that tout products on their site that will really be sold by a partner, the confusion is understandable.

"Buyers would often be confused about whether it was the same store, when they were moving into the checkout process," Duvall said. "Now we mimic the design and make it look like the rest of their site."

Yahoo e-commerce customers choose from a set of design templates. The matching checkout pages refer to customers who use one of the Yahoo-created design templates. Instead of having one generic checkout page for all e-commerce customers, Yahoo now extends those design choices to make the site look more consistent.

Evans said the consistency issue is critical to branding, which is going to be important to companies that have opted to do business under their own domain.

"Consumers don't want to lose out because they're buying from a small business. The branding experience needs to feel the same as they go into checkout. It's really important for consumers to be comfortable giving their financial information and not worried about whether they can return something. Keeping the experience consistent is important," she said.

With the changes, "it's a smoother experience, a more consistent brand experience. It's a visual experience, but it's also a trust reinforcing experience for the consumer," Evans said. "The contents of the shopping cart also continue through the whole process. That's not common. This is again a trust reinforcing thing for the consumer."

Another analystSanjeev Aggarwal, a senior analyst with The Yankee Groupagreed that visual consistency is critical, especially for a small business.

"At the end of the day, the [small-business owner] cares about the user experience," Aggarwal said. "If the whole site has a consistent look and feel, it makes the user buy the product and spend less time doing it. That's what this is all about."

Killing the Price Surprise

Another significant improvement is the inclusion of tax and shipping calculators at the very top of the checkout page, eliminating the surprise factor when customers discover that the attractive $9 price they thought they were getting balloons to $19 when the full price is revealed after they have provided all of the payment information.

Customers theoretically will find the higher total price less objectionable if they see it before they have filled out address and credit card information and feel they have a more risk-free exit option.

"Buyers really don't want to be surprised about the cost right before checkout," said Yahoo's Duvall. "We're now putting the shipping/coupon calculator right in the shopping cart. They just type in their Zip code, and the shipping and tax charges will appear right in the shopping cart."

That area will also handle coupons so customers don't have to worry about whether they'll have a chance to redeem one, Duvall said.

Yankee's Aggarwal said the upfront full pricing is important. "The customer doesn't have to go through multiple pages for a purchase. They can do it on one page and know before they buy an estimate on shipping, taxes and coupons," he said. "This way, they don't have to spend 10 minutes only to find out that shipping is going to be $50."

Jeremy Alicandri is the CEO of SimplyCheap.com, a discount electronics retailer that has been hosted by Yahoo's service for about six years and who spoke with Yahoo officials about the changes. He agreed that his site will benefit from the pricing consolidation presentation. "If a customer has to fill in information before they get that, there's more of a likelihood of them leaving," Alicandri said. "With some Internet sites' shipping costs inflating, a savvy customer knows they need to get those prices beforehand."

Alicandri also said the design change is a huge improvement.

"Branding is very important online. Internet customer loyalty is very low. Anything we can do to remind them of who we are is very beneficial," he said. "Before these changes, you'd add the item to the cart and see a standard template that every Yahoo store has. It even said Yahoo on it. It wasn't an opportunity to brand your store."

Alicandri added that shopping cart abandonment is a terribly important issue for small and medium merchants.

"We needed to show them more information to make them trusting customers. Now we can change the look of the store and add new fields, such as asking for information about where the consumer came from the Internet," he said. "That lets us know how our advertising dollars are working."

Yahoo's changes are improvements, but Jupiter's Evans stresses that it's nothing that many other sites aren't already offering. "This is simply bringing Yahoo's checkout more in line with standard and best practices," she said.